According to data from CoinmarketCap, as of 1:00 p.m. on January 22, Bitcoin fell 7.8% to $35,921, continuing to lose the important support level of $20,000 and hitting a six-month low.
Ether, the second largest cryptocurrency, lost nearly 13% to $2,500. The negative developments also spread to other stocks such as Solana, Cardano, Polkadot, Terra and Avalanche. The coin meme Dogecoin and Shiba Inu currencies fell 9.58% and 20.21% respectively in the past 24 hours.
In recent developments, the Russian central bank has issued a series of regulations to tighten cryptocurrency, including a ban on mining and trading activities. Russia now accounts for about 10% of global Bitcoin mining capacity, making it the main hub for processing online transactions.
The Russian central bank said that cryptocurrency is being used for illegal activities and poses risks to financial stability and monetary policy.
The potential risk of financial stability related to cryptocurrencies is much higher than in emerging markets, including in Russia, the central bank said.
Bitcoin and other digital assets are very popular in Russia. The central bank said that the value of people's cryptocurrency transactions is estimated at about 5 billion USD per year. However, the possession or possession of Bitcoin and other cryptocurrencies by Russian people is still allowed.
Russia seems to be following China's path in strictly managing Bitcoin. Accordingly, Beijing banned mining of Bitcoin and related transactions last year.
Both countries are also facing energy shortages and rising electricity prices. This makes Bitcoin mining a target for both financial and energy regulators. The Russian central bank said that mining Bitcoin creates inefficient electricity consumption.
In addition to the news from Russia, the sell-off was also triggered by other factors, including negative developments in the US stock market on Thursday (20.1).
In theory, Bitcoin and other digital assets should trade independently of traditional financial markets. However, they are showing correlation with other risky, high-growth investments, such as many technology stocks.
The Nasdaq composite index has fallen into the correct zone this week, down more than 10% from its all-time high in mid-November. This move stems from more hawkish monetary policies from the Federal Reserve.
More and more investors are betting that Bitcoin will continue to decline. According to the Fundstrat Global Advisors research center, Bitcoin's forever futures have moved to shorter-term positions, betting on depreciation rather than increasing prices.
Other technical analysts also see a gloomy future ahead. Bitcoin's sell-off may increase as margin calls appear in large numbers. As prices have decreased sharply, investors are forced to sell mortgages or pay additional fees to ensure the safety of assets.
A report by DecenTrader said that if Bitcoin continues to trade below below below below-38,000 USD, the market could see a liquidation similar to a strong sell-off on December 4, 2021. If this happens, Bitcoin will go straight to $33,000.
